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CHAPTER 1

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1.1 INTRODUCTION

The Organizational Structure Study at Apollo Tyres Ltd is a humble effort to

understand and comprehend about the organization. Here I have tried to make a study

on its success, particularly trying to concentrate on the structure of the organization

and the role of its various departments. The SWOT analysis and the financial analysis

are also enclosed in the report.

Apollo Tyres (ATL) is engaged in the manufacture of automobile tyres and

tubes at Perambra, Kerala; Vadodara, Gujarat and Pune, Maharashtra. Mahindra and

Mahindra and TAFC are its major OEM clients. The company was incorporated in

1972 and commenced its production in 1977. It was the first to receive the ISO 9001

accreditation in the Indian tyre industry for its entire range of brands. ATL took over

Premier Tyres in Apr.'95 in which its sick Stallion Tyres came under the Apollo brand

name. In 1999-2000, the projects of radial passanger capacity of 2000 tyres per day at

Vadodara plant and 50000 two/three wheeler tyres at conversion unit have been

successfully implemented, this has resulted in improving market shares in the

respective segment.

1.2 OBJECTIVE OF THE STUDY

The requirement to undergo training in an organization is a dynamic exposure

to the management students during their course of study. The objective of the study is

to:

1. Understand the structure and function of Apollo Tyres, Perambra.

2. Understand how the different departments function and the internal activities

between them.

3. To know the strength & weakness of the company

The study is to have an exposure into the functioning of the organization and

its different departments.

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1.3 SCOPE OF THE STUDY

The study was done during the month of May 2006. The organization selected

by me to conduct the study is Apollo Tyres Limited, Perambra.

1.4 METHODOLOGY OF THE STUDY

The study was undertaken personally visiting the plant at Perambra Plant,

Thrissur and was done over a period of 14 days. Both primary and secondary data are

used for the completion of the organizational study. Primary data were collected

through personal interview and secondary data were collected from the organizational

manual and different department manuals.

1.4.1 DATA COLLECTION

1.4.1.1 PRIMARY DATA COLLECTION

Direct personal interview with manager of concerned departments,

detailed interview with department heads and lower level workers in the

company.

1.4.1.2 SECONDARY DATA COLLECTION

1. Official records

2. Annual reports

3. Organizational manuals

4. Department manual.

All these were put together in the preparation of this report.

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1.5 LIMITATIONS OF THE STUDY

The Major Limitations are

1. The time allowed for completing the organizational study is 15 days. It was

not possible to do an in depth study into the organization.

2. Confidential Documents

The company was reluctant to reveal some official reports and documents as it

is kept confidential.

3 Working Hours

The study could be conducted only on the day working hours. Ideally the

working conditions of the employees during the evening and night shifts could

also have been studied

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CHAPTER 2

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2.1 HISTORY OF TYRES

The most important application of rubber relates to the transport sector, of

which the tyre Industry consumes over 60% of the total rubber produced. After the

invention of the wheel by the Sumerians 5000 years ago it was refined over the ages.

In the year 1846, R.W. Thomson invented the predecessor of the pneumatic tyres of

the modern age. From there, the tyre industry has grown to be one of the largest

industry of today.

During the last 20 years tyre has been virtually reinvented with most modern

technologies like steel radial tyres, a milestone in the tyre technology. Tyre sector is

experiencing a rapid improvement with the advent of newer technologies.

A tyre is an annular round shaped container made of elastic material,

reinforced by textile materials and tightened by metal rings. Geometrically it is a

torus, mechanically it is a pressure container, chemically a tyre consists of materials

from long chain macromolecules usually different types of rubber. A pneumatic tyre

is a fabricated structure, which holds air that carries the load of the vehicle with which

it is attached to.

2.2 INDIAN TYRE INDUSTRY

Indian tyre industry is two tier. The Tier-I players (top six tyre companies)

account for over 85% of industry turnover containing a well diversified product-mix

and presence in all three major segments i.e. replacement market, original equipment

manufacturers (OEM’s) and exports. Tier-II companies are small in size, mainly

concentrating on production of small tyres (for two/three-wheelers etc.), tubes and

flaps and the replacement market.

The demand and growth for the industry depends on primary factors like the

overall GDP growth, agricultural & industrial production,growth in vehicle demand

and secondary factors like the infrastructure development, prevailing interest rates and

financing options etc.

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The truck and bus market is the largest segment of the industry accounting for

approx. 70% of industry turnover in terms of value and tonnage - a segment in which

Apollo Tyres has maintained the leadership position amongst the industry players for

quite a few years.

In the year 2005-06, the truck and bus tyres segment volumes witnessed a

healthy growth of approx. 8%. Passenger car segment tyres volumes grew by approx.

13% in the year under review.

Steep rise in raw material prices with limited pricing flexibility impacted the

profit margins of all the players. This was the third consecutive year of raw material

cost- push both for natural rubber and crude oil linked raw material basket .Consistent

rise in major raw materials costs (natural rubber, nylon tyre cord, carbon black,

synthetic rubber) have resulted in pressure on the margins of the tyre companies

despite good topline growth. In fact some of the major tyre companies are operating at

break even situation.

Tyre exports are increasing consistently and the industry saw a growth of

approx. 9 % in this area in the year under review. The radialisation in the important

commercial vehicle segment is still at a mere 2%. This has not really picked up pace.

Going forward, we expect it to gather some momentum but still levels of radialisation

in this segment are predicted to be around 10% in five years time.

The year ahead still looks tough with no respite in the raw material prices. The

cost- push continues unabated and with the industry players reluctant to take large

price increases, the challenge on profit margins will stay. The story on the demand

front though looks good in medium term with the economy continuing to do well.

2.2.1 HIGHLIGHTS

1. The fortune of this industry depends on the agricultural and industrial

performance of the economy, the transportation needs and the production of

vehicles.

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2. While the tyre industry is mainly dominated by the organised sector, the

unorganised sector holds sway in bicycle tyres.

3. In the last five years (1994-95 to 1998-99), the industry managed to achieve a

compounded annual growth of only 4.40 per cent. However in the last fiscal

the industry registered a growth of 7 per cent.

4. Natural rubber constitutes 25 per cent of the total raw material cost of the

tyres.

5. The ratio of natural rubber content to synthetic rubber content is 80:20 in

Indian tyres, whereas world wide, the ratio of natural rubber to synthetic

rubber is 30:70.

2.2.2 KEY INDUSTRY DATA

Industry Turnover : Rs. 14,250 crs

Total No. of Tyre Companies : 43

Industry Capacity Utilization : Estimate: 89%

Major Players : Apollo Tyres, Ceat, JK, MRF

Commercial Vehicles : approx. 67% by Revenue

(INDUSTRY DATA: SOURCE ATMA FOR FY 2004 – 05)

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CHART NO: 1

2.3 FACTORY LAYOUT

THRISSUR PERAMBRA CHALAKKUDY

2.4 APOLLO TYRES LTD. (ATL)

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Main Gate

Chief Security officer

Parking Area

AdministrativeOffice

Reception

Time Office

Canteen

DieselStorage

DieselPowerPlant

StaticWaterTank

Boiler

Utility

RFLStorage

O/EStorage

DieselStorage

Shop Floor

Main Office

First Aid&

Ambulance

FireStation

Scrap

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APOLLO TYRES LTD. is currently th the 16 largest tyre manufacturer in the

world and the second largest in India. It is also one of the fastest growing tyre

companies in the world.

A Poised for an undisputed leadership position in the very near future, Apollo

currently enjoys the largest market share in heavy commercial vehicle and light truck

tyres. For the past few years, Apollo has registered not only the highest sales and

turnover growth in the industry but is also by far the most profitable. Innovative

marketing practices and cost control at every level have made a considerable

difference to the company's bottom line.

Apollo Tyres is also the first tyre manufacturer to have obtained an ISO 9001

certification for all its facilities in October 1994. The company believes in

maintaining strict quality control standards to enhance customer satisfaction at all

times. These have resulted in recognition in terms of awards and certifications for

introducing some of the best quality management systems in the industry.

Apollo was also one of the few tyre manufacturers to obtain the QS 9000

certification in March 2001.All Apollo products conform to the standards prescribed

by the Government of India (DGS&D) and to at least one or more of the following

standards: the Indian Defence Ministry (CQAV), the Department of Transport, USA

(DOT), the European Economic Commission (ECE), the Saudi Arabian Standards

Organisation (SASO) and Covenin of Venezuela.

BUSINESS ACTIVITY: Manufacture and sale of tyres

ALLIED BUSINESSES: Tread rubber for commercial vehicle tyres and

distribution of alloy wheels for passenger cars

FINANCIAL YEAR: April 1 to March 31

NET SALES TURNOVER FY 2005-05: Rs3002.12 Crs as on March 31,

2006

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NO OF EMPLOYEES: Approximately 7,000

REGISTERED- OFFICE: 6th floor,

Cherupushpam building

Shanmugham road

Kochi-682 031, Kerala

CORPORATE OFFICE: Apollo House

Gurgaon

Haryana

WEBSITE www.apollotyres.com

2.4.1 BOARD OF DIRECTORS

1. Onkar S Kanwar (Chairman & Managing Director, Apollo Tyres

Ltd)

2. T Balakrishnan (Principal Secretary, Industries, Government of

Kerala)

3. K Jose Cyriac (Principal Secretary, Finance, Government of Kerala)

4. Jean Marc Francois (President, Asia-Pacific, Groupe Michelin)

5. Nimesh N Kampani (Chairman, J M Morgan Stanley Pvt Ltd)

6. Neeraj R S Kanwar (Chief Operating Officer, Apollo Tyres Ltd)

7. Raaja Kanwar (Managing Director, Apollo International Limited)

8. Dr S Narayan (Former Principal Secretary to the Prime Minister of

India)

9. M R B Punja (Former Chairman, Industrial Development Bank of

India)

10. K Jacob Thomas (Managing Director, Vaniampara Rubber Co

Limited)

11. Sunam Sarkar (Chief, Strategy & Business Operations, Apollo Tyres

Ltd)

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12. Shardul S Shroff(Advocate & Managing Partner, Amarchand &

Mangaldas and Suresh A Shroff & Co)

13. Robert Steinmetz(Former Chief of Intl Business, Continental AG,

Germany)

14. U S Oberoi (Chief, Corporate Affairs, Apollo Tyres Ltd)

2.4.2 BANKERS

SBI, SBM, SBP, BANK OF INDIA, ICICI BANK LTD, UNION BANK OF

INDIA AND THE FEDERAL BANK LTD, CANARA BANK, CITI BANK,

IDBI BANK LTD, STANDARD CHARTERED BANK

2.5 MANUFACTURING FACILITIES

Overall Capacity: Over 700 tonnes per day (250,000 tonnes per annum)

Total tyres produced in 2005-06: Over 6.7 million units

2.5.1 PERAMBRA PLANT (Perambra, Cochin, Kerala)

Year of operation: 1977

Perambra plant is the largest employer of people amongst the private

sector companies in Kerela.

Products manufactured

Truck bias

Light ruck bias

Farm radial and bias

2.5.2 KALAMASSERY PLANT (Kalamassery, Cochin, Kerala)

Year of operation: 1962

Kalamassery Plant commenced its operations in September 1962 It is

acquired in 1995

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Products manufactured

Truck bias

Light ruck bias

Farm bias

2.5.3 PUNE PLANT (Ranjangaon, Pune, Maharashtra)

Year of operation: 1996

Apollo Tyres built a new plant at Ranjangaon at Pune in 1997 to

manufacture tyre tubes

Products manufactured

Automotive tubes

2.5.4 LIMDA PLANT (Limda, Baroda, Gujarat)

Year of operation: 1991

The Limda plant came into operation in 1991. It is now the hub for

Apollo's radial tyre production.

Products manufactured

Truck bias

Light truck radial and bias

Farm radial and bias

Passenger car radial

2.6 PRODUCT RANGE

Truck and Bus Bias, Light Truck Bias and Radial, Passenger Car Radial, Farm

Bias and Radial

2.6.1 TRUCK

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1. High Load Technology

Brands: Loadstar Super, Loadstar Super Gold, Loadstar Super Hercules,

Kaizen 50L

2. Load & Mileage Technology

Brands: XT–7 Gold, XT–7, XT–7 Haulug, Amar Deluxe, Amar, Kaizen 36 L,

Kaizen 99R Plus,Kaizen 77 R, Kaizen Commando

3. Premium Mileage Technology

Brands: XT–9 Gold, XT 9, Amar Gold,Kaizen XDT

4. Mileage Technology

Brands: Champion Gold, Champion, Amar AT Rib, Kaizen 27L, Champion

DXL

2.6.2 LIGHT TRUCK

1. High Load Technology

Brand: Loadstar

2. Load & Mileage Technology

Brand: Milestar

3. Premium Mileage Technology

Brands: Amar Deluxe & Amar Gold (rib),XT–9 & XT-9 Gold (lug), Duramile

(radial)

4. Regular Mileage

Brand: Champion

2.6.3 PASSENGER VEHICLES

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1. Passenger Car Radial Tubeless

Brand: Acelere

2. Passenger Car Radial Tube Type

Brand: Amazer XL

3. 4x4 Tubeless

Brand: Hawkz

4. 4x4 Tube Type

Brands: Amazer XL, Hawkz, Storm

5. Van Tubeless

Brand: Quantum

6. Van Tube Type

Brand: Quantum

2.6.4 FARM

1. Cultivation

Brands: Krishak Super, Sarpanch

2. Haulage

Brand: Power Haul

3. Mixed Application

Brands: Farm King (radial), Krishak Premium (bias)

2.6.5 INDUSTRIAL

1. Mining

Brand: Y-Lon

CHART N0: 2

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2.7 SHARE HOLDING PATTERN OF ATL

2.8 APOLLO TYRES – VISION & VALUES

2.8.1 VISION:

“A leader in the Indian tyre industry

And a significant global player,

Providing customer delight

And enhancing shareholder value.”

Though Apollo is presently one of the leading tyre companies, the

continued success will depend on its future plants. The company is laying

steps for increasing production capacity. In the future there is a plan to

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manufacture tyres with matching colors to the vehicles according to the needs

of the customers.

2.8.2 CORE VALUES

CREATE

It means

C- Care of Customers

R- Respect for Associates

E- Excellence through Teamwork

A- Always Learning

T- Trust Mutually

E- Ethical Practices

2.8.3 OBJECTIVES OF APOLLO TYRES LTD

The corporate objectives of Apollo Tyres Ltd are as follows.

1. Employee satisfaction.

2. Customer delight.

3. Revenue growth.

4. Operating margin improvements.

2.8.4 STRATEGIC VISION

Apollo Tyres Ltd. aims to be the ‘supplier of choice’ for its entire customer

base. To achieve this we invest in Research & Development, Technology

Enhancement and Quality to ensure the superiority of our offerings in all aspects. We

have already commenced on the journey to going beyond being a mere tyre supplier

to our consumers to becoming a complete solution provider for all their transportation

needs.

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We see growth along two paths: Offering a wider suite of products to our

current customers and ensuring that an ever-widening circle of consumers gets to

enjoy the benefits of an Apollo experience.

On the first path we have already launched a range of alloy wheels for new

generation tyres that complement our high performance tyre offerings. More such

related products and services are on the way. To reach out to newer customers we are

constantly on the lookout for new products and fresh markets where we can make a

difference. These markets could be serviced out of our existing facilities or new ones

could be acquired or built, to ensure customer proximity.

2.8.5 COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

At Apollo Tyres Ltd., corporate governance is all about the processes, which

involve direction and control of affairs of the Company in a fashion that ensures

optimum returns for the stakeholders. Corporate governance is a broad framework,

which defines the way a corporate body functions and interacts with its environment.

It is a combination of voluntary practices and compliance with laws and regulations

leading to effective control and management of the organisation.

Your Company is sincerely following the philosophy of good corporate

governance by creating and holding strong business fundamentals and delivering high

performance through relentless focus on the following: –

1. Transparency by classifying and explaining the Company’s policies and

actions to those towards whom it has responsibilities, i.e. maximum possible

disclosures without hampering the Company’s and shareholders’ interests.

2. Accountability whereby even though the management has the executive

freedom to drive the enterprise towards growth, it chooses to use this freedom

within the framework of effective accountability and full responsibility.

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3. Professionalisation ensures that the management teams at all levels are

qualified for their positions, have a clear understanding of their roles and are

capable of exercising their own judgement, keeping in view the Company’s

interest, without being subject to undue influence from outsiders.

4. Trusteeship brings into focus the fiduciary role of the management to align

and direct the actions of the organization towards creating wealth and

shareholder value.

5. Corporate Social Responsibility ensures the promotion of ethical values and

setting up exemplary standards of ethical behaviour in our conduct towards

our business partners, colleagues, shareholders and general public, i.e. abiding

by the laws, showing mutual respect and acting with honesty and

responsibility. Corporate social responsibility ensures that the Company

contributes to society’s overall welfare by undertaking not-for-profit activities,

which could benefit all or any of its stakeholders in society.

6. Safeguarding Integrity ensures independent verification and truthful

presentation of the Company’s financial position. For this purpose, the

Company has also constituted Audit Committee, which pays particular

attention to the financial management process.

7. Continuous focus on training & development of employees and workers to

achieve the overall corporate objectives.

Your Company is open, accessible and consistent with communication and

shares long-term perspective and firmly believes that good Corporate Governance

practices underscore its drive towards competitive strength and sustained

performance. Thus, basic Corporate Governance norms have been institutionalized as

an enabling and facilitating business process at the Board, Management and

operational levels.

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2.9 KEY MILESTONES

TABLE 1

1972 – The company's license was obtained by Mr Mathew T Marattukalam, Jacob

Thomas and his associates

1974 – The company was taken over by Dr. Raunaq Singh and his associates

1975 – April 13, Perambra Plant Foundation stone was laid down.

1976 – Apollo Tyres Ltd. was registered.

1977 – Plant commissioned in Kerala with 49 TPD capacity.

1982 – Manufacturing of Passenger Car Radial Tyres in Kerala.

1991 – The second plant commissioned in Baroda.

1995 – Acquired Premier Tyres Ltd. in Kerala.

2000 – Exclusive Radial capacity established at Baroda.

2003 – Radial Capacity expanded to 6600 tyres per day.

 – November 17, JointVenture with Michelin

2004 – Launch of Apollo Acelere- ‘H’ Speed Rated Car Radials.

2005 – April 13, Perambra Plant completes 30 Years.

2006 – January 30, Dunlop South Africa is acquired

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CHART NO: 3

2.10 ORGANISATION STRUCTURE OF ATL

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ManagerPurchase

Purchase, RMS, FGS, Engg goods

ManagerSystems

Systems

ManagerPPC

PPC

Division head Engg.

Mech.maint, Electrical&electronics insrumentation, Design & projects

civil, utilities

Division head

production

Production

Division head Technical

Tyre Engg, heat engg, compounding

Division head HR

HR, IR, time office, security,

safety,welfare.admin

Assoc. manager (Industrial engg.

Dept)

Industrial Engg

Division head commercial

Unit Head

Accounts, finance, costing, excise

Manager (Quality

assurance)

Quality assurance, ISO-9000, QS-9000

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CHAPTER 3

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HUMAN RESOURCES DEPARTMENT

3.1 HUMAN RESOURCES DEPARTMENT

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Human resources play a crucial role in the development process of the present

economy. Though the exploitation of natural resources, availability of physical and

financial resources and international aid play prominent roles in the growth of modern

economies, none of these factors is more significant than efficient and committed

manpower.

3.1.1 THE EMPLOYEE STRENGTH OF ATL

TABLE 2

OFFICERS 268

STAFF & SERVICE STAFF 138

ENGINEERING WORKERS 177

PRODUCTION WORKERS 1271

PRODUCTION APPRENTICE 417

APPRENTICE 2416

CANTEEN 28

LOADING & UNLOADING 28

TTF WORKERS 41

GENERAL CONTRACT WORKERS(Sr ) 99

GENERAL CONTRACT WORKERS(Gr ) 94

GENERAL CONTRACT WORKERS(Engg ) 60

GRAND TOTAL 2904

3.1.2 FUNCTIONS OF HUMAN RESOURCES DEPARTMENT

1. RECRUITMENT

2. TRAINING

3. TIME OFFICE

4. INDUSTRIAL RELATIONS

5. SAFETY

6. SECURITY

7. WELFARE

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3.1.2.1 RECRUITMENT

Recruitment is done through advertisement and employment exchange.

Candidates are called for interview and final decision is with the chief executive. As

of now there are no major constraints in attracting the right talent since the

organisation is a reputed one and the compensation package is really attractive.

3.1.2.2 TRAINING

As jobs have become more complex, the significance of employee training has

increased. The modern complex society has created intense pressure for organisation

to readapt the produce and services produced as a competitive product. This has

necessitated raising the skill level and adaptability of employees.

Apollo provides training for both managers and workers. Training program for

managers consists of both internal and external program. The workers undergo

internal training programmes conducted by experts. External training is done by

deputation to professional training centers.

A separate register is kept for recording the training activity the employee has

undergone. The human resource department selects candidates for training based on

the advice of department heads. For this performance appraisal reports are considered.

Sometimes random selection of the candidates for training is also done.

The effectiveness of the training program can be adjudged by providing the

trainees with a feedback format. However employees are of the view that personal

interview should be conducted to assess the effectiveness of the training program.

3.1.2.3 TIME OFFICE

The department, is concerned with registering the time in and time out of the

workers. Other activities related are; payment of wages, incentives, leaves etc. A

separate register is kept for different shifts. A leave book is maintained and it

contains:

1. Leave balance

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2. Leave credited

3. Leave awaited

The daily attendance report for employees specifies the following:

1. Section department.

2. Shift

3. Date

4. Clock no. Current Working Time

5. Grade

6. Human resource worked

7. Clock no.

8. Scheduled shift Over Time

9. Human resources worked

The daily attendance report is verified by the supervisor, shift engineer and

shift superintendent/department head.

3.1.2.3.1 Working Hours

A Shift 6 a.m to 2 p.m

B Shift 2 p.m to 10 p.m

C Shift 10 p.m to 6 a.m

G Shift 9 a.m to 5 p.m

* Trainees will be generally put in general shift.

3.1.2.3.2 Salary Payment

All supervisory personnel are required to open SB account with the South

Indian Bank Ltd, Perambra and intimate the account number to accounts department

who in turn will remit the salary. In case of non-supervisory personnel cash payment

is done in the following dates:

Staff and service staff: Last working day of the month

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Production/engineering workmen: Seventh working day of succeeding month

3.1.2.3.3 Entry and Exit

All employees are given photo identity badge and all outsiders entering are

issued a Visitor badge. The security section regulates the entry and exit of the

personnel and material to the factory. In case of materials, gate pass is necessary for

both entry and exit. Out-pass system is also there, where the time for INS and OUTS

are recorded by the security officer at the gate.

3.1.2.3.4 Attendance Procedure

Identity badges with the photo of the respective personnel are supplied to the

employees. On arriving for duty at the factory each person punches his/her attendance

by inserting the badge in the electronic punching system provided at the time office.

This process is repeated while leaving the factory also. Attendance is crosschecked

with the attendance report of the workman and the attendance register maintained at

the various sections for the staff and managerial persons.

3.1.2.4 INDUSTRIAL RELATIONS

A good industrial relation exists in the organization. The management and the

employees jointly find the solutions for the problems. There exists a good relation

between employer and employee.

There are four main trade unions recognized by the company.

1. ATEU (Apollo Tyres Employee Union) –with the political influence of

CPM

2. ATSWU (Apollo Tyres Staff and Worker Union) – with the political

Influence of INTUC

3. ATMS (Apollo Tyres Mazdur Sangh) – with the political influence of

BMS

4. ATWM (Apollo Tyres Workers Movement)

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The trade union which get at least 20% of vote of total strength are recognized by

the management. The management has introduced a long-term settlement (LTS) plan,

which is nothing but a collective bargaining agreement. The decisions taken jointly by

the trade union and the management. Also as part of the HR initiatives employee

involving them in productivity related issues such as quality circles and professional

circle, a social gathering such as factory day and other celebrations encourages

Participation.

3.1.2.5 SAFETY

The organisation follows all the provisions under the Factories Act 1948. The

amendment there in is also being followed here. The personnel are given the safely

equipment and the directions are given for the same. There are safety directions

displayed at noticeable points and around the plant premises. In Apollo tyres a

separate safety book is given to each employee, which prescribe certain rules and

procedures inorder to create a working environment free of accidents. No major

accident has occurred in the plant for the past ten years.

The following are safety policy of ATL:

1. Accidents resulting in personal injury and damage to property and equipment

represent needless human and economic waste, which must be prevented by

every reasonable means available.

2. All personal injuries are prevented. The protection of human lives demands a

complete and continuing effort to eliminate accident injury.

3. Officers of all levels have as a primary responsibility for the safety and well

being of all persons who report to him.

3.1.2.6 SECURITY

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The security division of ATL is very well managed. It controls the

movement of both material and men into the organisation. Security staff

headed by a chief security officer, work under 3 shifts. To facilitate the

security measures, single point entry is adopted to control visitors and

material. Separate gate passes are issued for materials section-wise. The

various sections to which gate passes are issued:

1) Raw material stores

2) Engineering goods stores

3) Finished goods scores

Visitor’s passes are also issued. Further more there are periodical

checks around the plant and security lights are provided at vantage points. The

personnel are allowed to leave the factory only at the end of the shift except

for other demanding reasons.

3.1.2.7 WELFARE

The aim and objective of welfare fund shall be to render financial assistance

and to encourage cultural, sports, social, games and other welfare activities among

the members and to foster among them a spirit of mutual friendship, co-operation

and understanding. Welfare activities are of two types namely,

1. Statutory

2. Non-Statutory or settlement grievances

3.1.2.7.1 STATUTORY ACTIVITIES

(a) Employee Provident Fund and Family Pension Scheme

The employee contribution towards PF (provident fund) and FPF (family

pension fund) is 12% of monthly salary (Basic+DA) with monthly contribution by the

company. The employees are eligible for interest @ 12% on total contribution. It is

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calculated monthly. The member in the event of permanent disability, super annuation

or retrenchment can withdraw the amount accumulated in PF. In the event of dying in

harness the amount will be paid to the nominee.

The coverage of FPF, which extends to employee, spouse, minor sons, and

unmarried daughters, provides for pension at specified rates to the family of the

deceased member.

(b) Employee State Insurance (ESI)

Any employee drawing a salary less than 6500 per month (excluding the

conveyance and washing allowance) will be covered by this scheme. It is applicable

for both accidents and sickness. The employees will get free treatment and

compensation for the days they are absent due to illness or accidents. Employees have

to contribute 1.75% of his wages to ESI fund. Employer will contribute 4.75%.

Medical assistance will be given to the employee and his family.

(c) Gratuity

An employee is entitled to receive gratuity if he has completed 5 years of

continuous service with the company. The qualifying period of 5 years is not

necessary in case where the termination of service is due to death or total disablement.

It is computed by dividing monthly salary/wage by 26 working days and multiplying

the quotient by 15 days and no of years.

3.1.2.7.2 SETTLEMENT GRIEVANCES

(a) Group Savings Linked Insurance Scheme (GSLIS)

The employee pays the premium and the employer will only act as a

Coordinator by deducting the monthly contributions from the salary/wage of the

employees and remitting them to the LIC. In the unfortunate event of death of an

employee the Insurance amount will become due for payment. On cessation of service

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the entire accumulated amount with interest standing to the credit of the employee in

his savings account will be refunded.

(b) Group Personal Accident Insurance Scheme (GPAIS)

All employees outside the purview of ESI are insured for an amount equal to

48 months salary (Basic+DA). The company in the event of death or permanent total

disablement due to accident pays the insurance premium. The amount of

compensation payable will be equal to 100% of the capital sum insured.

(c) Group Mediclaim Insurance Policy (GMIP)

The mediclaim policy coverage was revised from the existing Rs 15000 to Rs

20000 per member per year. It is also agreed to extend the coverage of this scheme. It

is also agreed to extend the coverage of this scheme to the parents of the employees.

The management agrees to reimburse 50% of the insurance premium per year payable

for employees, spouse, children and parents of the employees subject to a maximum

number of six persons per family. These changes will be effective from 1st January

2000 onwards.

(d) Two Wheeler Loan Interest Subsidy Scheme

Management agrees to reimburse 70% of interest on Two wheeler purchased

and owned by the employees as subsidy for a maximum loan amount of Rs 50,00,000

(maximum price of Rs 50,000/ Two wheeler) each in every year till next settlement.

This interest subsidy will be given only for the un-defaulted payments. Interest

accrued on defaulted payments will not be subsidised. Priority for this benefit will be

based on service seniority and loan liabilities /repaying capacity.

Workmen who have not put in a minimum physical attendance of 240 days per

year in three years during the immediate previous 5 calenders will not be entitled to

this benefit.

The subsidy will be withdrawn in cases where the loan repayment is defaulted

for 6 months continuously in any year. The subsidy will stand withdrawn on leaving

the services of the company. The subsidy re-imbursement will be applicable only for

loans obtained from established agencies approved by the management. No subsidy is

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payable for the period of strike/lock-out. Preference will be given to those employees

who are not availing the company bus service.

3.1.3 HR INITIATIVES

In order to motivate employees and to increase productivity HR department

has initiated a number of steps, which include:

3.1.3.1 APOLLO VISION

'APOLLO VISION' is the in-house newsletter published by Apollo Tyres

Ltd. This newsletter is aimed at the families of the employees of ATL. It covers the

important events that has taken place in the company like training programmes,

meetings etc.

3.1.3.2 HR SPEAKS

It is a bulletin board that is placed in the company, which gives information

about the various activities of the HR department.

3.1.3.3 TASK FORCE

It has been formed to curb absenteeism in the company. There are around 12

task forces in the company. They visit the houses of employees who are habitual

absentees and provide counseling to such employees.

3.1.3.4 LEAVE PLANNER

These are used to help employees plan their leaves without affecting the

activities of the organisation adversely.

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3.1.3.5 PROFESSIONAL CIRCLE

It consists of members from the management staff who meet regularly to sort

out problems that are faced by them in the day-to-day operations of the company.

3.1.3.6 ARTS AND SPORTS CLUB

HR department regularly organizes programs in the company. Factory day is

celebrated on 26th January every year.

3.1.3.7 SUGGESTION BOX

Employees are encouraged to give their suggestions, which would help the

company to improve its operations.

3.1.4 QUALITY CIRCLE CONCEPT

The concept of quality circles was first introduced in Perambra plant as far

back as 1988. However due to the lack of adequately trained facilitators and other

teething problems the initial activities of the quality circles was carried on a rather

modest scale.

As on today Apollo has 30 active QC in operation covering about 10% of total

workforce and the number is increasing every month. The system is very much

vibrant, and at least 7 circles have presented full-fledged case studies to the top

management so far.

Apollo has been able to achieve considerable financial savings and also

improve general discipline as a result of the QC. Some of the notes worthy

achievements of the QC are given below:

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"Rose Circle", is the first QC of the company from bead winding section,

evolved a system for the reduction of scrap which will fetch a saving of more than

Rs.15 Lakhs, when the suggestions are fully implemented. In August 1992, they

presented this case study in the all Kerala competition conducted by the QCFORUM

OF India.

In April 1993) "Diamond Circle", from the mechanical maintenance section

participated in the all Kerala case study presentation competition conducted by

National Institute for Quality and Reliability. One of the major problems faced by

Apollo in 4-roll calender was 'derailment of wind up stand' in the calendering

operations. The diamond circle members solved this problem effectively and saved

Rs.80, 000/-per annum. This study was adjudged as the best case study in 1993 in the

state level and second best in the national level.

“Surya Circle” in vertical bias cutter section presented recently another case

study to the top management. This study was rated as the best so far. The circle

members eliminated the problem of "improper ply cut" in vertical bias cutter, which

was one of the major scrap-contributing factors for the last 16 years. In this case the

financial saving will be to the tune of Rs.18 Lakhs/annum. This case study was rated

as the second best in the zonal competition conducted in March 1995.

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CHART 4

3.1.5 ORGANISATION STRUCTURE OF HUMAN RESOURCES DEPARTMENT

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Manager Admin

ExecutivesManager personal & IR

Head HR & Admin

Group manager security

Executives

Assoc. managerIR

Assoc. managerTime office

Assoc. manager

Executives ExecutivesExecutives

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PURCHASES & STORES DEPARTMENT

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3.2 PURCHASE DEPARTMENT

This department is concerned with the purchase of both indigenous and

imported materials. It covers procurement of indigenous engineering spares, general

engineering and miscellaneous items other than raw materials. This department is

headed by senior manager and under him there are a number of officers and staff. The

department is provided with the latest communication facilities and computers.

3.2.1 OBJECTIVES

1. Continuous availability of materials

2. Make purchase competitively and wisely at the most economical price.

3. Purchase in reasonable quantities to keep investment in materials at

minimum.

4. Purchase proper quality of materials to have minimum possible wastage of

materials and loss in production.

5. To develop good supplier relationship, this will ensure the best terms of

supply of materials.

6. To develop alternative sources of supply.

7. Adopt most advantageous method of purchase to ensure smooth delivery of

materials.

8. To act as an information centre on the materials knowledge.

9. To sum up, the basic objective of setting up a separate purchase department

is to ensure continuous availability of requisite quality of materials, to avoid

hold up of production and loss in production and at the same time reduce the

ultimate cost of finished product.

3.2.2 ACTIVITIES OF PURCHASE DEPARTMENT

1. A. Receipt of Purchase Requests

1. B. Review of Pending Indents for Ordering (FOR STOCK ITEMS)

1. C. Review of Normal Indents for Ordering (FOR NON-STOCK ITEMS)

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2. Requests for Quotations and Receiving Quotations.

3. Indigenous Purchase Order Generation.

4. Import Purchase Order Generation:

5. The indigenous Purchase Orders shall be categorized as follows:

a. Normal Purchase Orders:

b. Capital Goods Purchase Order

c. Annual Rate Contract

6 Review of Purchase Order

7 Authorization of Purchase Orders

8 Amendment to Purchase Orders

9 Logistics for Material Delivery at EMS:

10 Insurance of Goods in Transit

11 Payment to Suppliers

3.2.3 VENDOR SELECTION

This includes a list of steps involved in selecting the right vendor for stack

items identified as critical by the department to enable a smooth functioning of the

plant. Vendors are generally identified as

1. Manufacturers

2. Dealers

3. Firms offering various services

Manufacturers are divided into two:

1. OEM (Original Equipment Manufacturers): The OEM shall be identified

as a vendor for the supply of equipment, spares, components etc.

2. OCM (Original Component Manufacturers): For all spares, components

and consumables, attempts are made to identify the manufacturer and source

the items directly from them so as to get quality products or services at

optimum cost. Information available on supplier's manuals, catalogs, details

available on the nameplates of machines etc shall be used for the purpose.

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3.2.3.1 APPROVAL OF VENDORS

All OEM vendors who have supplied the machinery equipments and

instruments are approved vendors for sourcing the respective components and spares.

All original components manufacturers are treated as approved vendors. Further

consideration for approval includes

• Vendors supplying goods satisfactorily for last 5 years

• All authorised dealers of OEM/OCM shall be treated as approved vendors

• For the order of finished goods specified brands are approved.

3.2.4 PURCHASING RECORDS

1. Purchase Order Record: – POs of all materials bought

2. Vendor Record: – List of all vendors & their complete mailing addresses

3. Blue print and specification record Drawing: – Many items are purchased by

blueprint specification are kept in separate files with index showing their

location and where the copies have been sent. Thus for repeat order to old

supplier it is not necessary to send new copies of the specification.

4. Contract file: -Certain goods may be bought under a term contract if so, the

purchasing department must maintain a record of such contract.

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3.3 STORES DEPARTMENT

Inventory department is responsible for storing the raw materials, finished

goods and spare parts required for the smooth functioning of the organisation. In this

era of cutthroat competition companies cannot survive without a well-managed

inventory. A number of Inventory control techniques like ABC, VED etc are used for

maintaining an optimum level of inventory

3.3.1 ENGINEERING STORES

The efficiency of the manufacturing operations largely depends on the

efficient functioning of the receiving and stores operations. The important functions

of stores department are receipt, storage, retrieval, issue records, house keeping,

surplus stock, verification, co-ordination and co-operation.

In Apollo Tyres Engg stores follows a centralized storing procedure for the spares.

The main advantages of centralized storing are:

1. Reduced investment in inventories

2. Reduction in administrative cost

3. Possibility of standardization of materials reducing the variety of items stored

4. Reduction in requirements of personnel

5. Reduced storage space and other incidental expenses Greater safeguard

against pilferage and theft

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CHART 5

3.3.1.1 ENGINEERING STORES FUNCTIONS

ERP (SAP) is implemented in all the factories of Apollo Tyres. . These had

become a great help in engineering stores for tracking of materials, to find out it's

location, it’s-order level etc. Once items reached its re-order level automatic indent is

generated. When the material is arrived stores receipt the materials. After the receipt

of materials the stores department does physical verification of the materials. If any

problem is there with the material then it send back to the supplier. Once the material

is accepted three copies of the SIR is made. Once for purchase department, once for

Accounts and finance department and one for stores. If it is PR items (Items which are

purchased on the request of respective departments) them it is directly issued to the

respective user. If it is stock items then the next step is coding.

3.3.1.2 ENGINEERING MATERIALS

At present, total number of item codes in Engineering store are 38500

approximately. Out of this 23500 items are spares and 15000 items are consumables.

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Receipt of Materials

Verification of the Stores items

Generation of S.I.R

Inspection of items Accept quantity

Identified by tags & stored in respective

location Posting of GR

Issue of materials to production

on MR

Automatic indent for items that

reach re-order level

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1. Consumables (General stores items)

Consumables (General stores items) are standard engineering items

(bearing, belt, etc).It is decided to identify common codification schema for all

consumable items. All the items shall be brought under this codification

schema.

2. Spares

Spares are part of equipments. Equipments are varying from plant to

plant by make and model.

It is decided to

1. Identify common equipments by same make and model

2. Assign uniform code to equipment make and model wise, which is

common across plants

3. Assign respective plant spares with code of equipment.

In general

1. Item code for consumables will be common across all plants

2. Item code for spares will be plant specific with respect to common equipment

code.

However, material classification in SAP will be used to trace the spares to

common machines. Material Master Codification will follow the external numbering.

3.3.2 FINISHED GOODS STORES

3.3.2.1 RECEIPT OF FINISHED GOODS

All finished goods after final inspection are kept at the transferring area in

each shift. The staff of final finishing will prepare a finished goods transfer-note in

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triplicate which will be countersigned by the staff of FGS/TTF After verification,

finished goods transfer-note will be serially numbered and have the following details.

1. Material code

2. Description

3. Quantity.

The original copy of the transfer-note will be issued to central excise wing

after entering the details in stock statement, duplicate will be given back to production

as their file copy and triplicate will be issued to Production planning.

One staff each from production and FGS/TTF will separately verify the

quantity, size, ply rating of the finished goods and compare against the entry in the

transfer-note.

3.3.2.2 REMOVAL OF FINISHED GOODS:

The finished goods required for despatch kept at the transferring area, after

preparing the transferring-notes, will be removed to the loading bay and balance will

be removed to stores for storage, after completing packing for required item.

3.3.2.3 HANDLING AND STORAGE

Finished goods store is fully covered and protected from sunlight and

rainwater. The floor is cleaned to remove dust. Proper passage is left for access for

periodical inventory. All the tyres to be stored are rolled from transferring area to

stores and stored size-wise. A stock statement is made as of the closing of the day.

After preparing the stock-statement, finished goods transfer-notice handed over to

factory excise wing for recording and filing.

3.3.2.4 DISTRIBUTION OF FINISHED GOODS

Marketing coordinator gives despatch schedule on day-to-day basis. The

destination to which trucks are required is arranged by marketing coordinator one day

in advance. Load slips are prepared as per the plan made. Store-man will keep the

loads as per the load slip at the loading bay. Staff of FGS, TTF, Security and

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representative of transporter will check the load, kept separately for size, ply and

quantity. After checking the load-slip will be signed by the staff and given for

preparing transport documents and goods will be loaded on to the lorries.

3.3.2.5 ASSEMBLING TYRES, TUBES AND FLAPS (TTF)

Upon receipt of goods for TTF, FGS shall prepare a brought-out goods receipt

report (BGRR) and it shall be forwarded to the head of QA department. QA

department shall organise for sampling and inspection of the goods received. Upon

acceptance/rejection of the consignment, QA department will return the BGRR with

status of inspection marked on the same.

A consignment of goods shall be used for packing after obtaining approval for

use from QA department. In case a consignment is rejected, the same shall be tagged

as "Rejected" by QA department.

3.3.2.6 PACKING

HDPE (High Density Poly Ethylene) bags containing tubes and flaps shall be

identified with month of production. Tyre, tube and flap shall be packed as a set, as

per the specification applicable for domestic supply.

Procedure

Clean the inside of the tyre properly and insert the tube and flap inside the

tyre. Inflate the tube carefully up to the pressure just sufficient to hold the tube inside

the tyre. Ensure that the flap does not come out from the assembly.

Fit the dust caps on the tube valve stem. Strap the assembled tyre as per

packing specifications. Inspect the TTF assembly for correct tyres and any loose

flap/tube during despatch.

3.3.3 RAW MATERIAL STORES

Various raw materials used in the manufacture of tyres are as follows

1. Polymers: - natural rubbers, synthetic rubber, (SBR, PBD, BUTYL etc)

2. Fillers, carbon black, reinforcing clays

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3. Process oil, plasticizers /tackifiers

4. Curing agents/sulphur

5. Accelerators/activators

6. Antioxidants/antiozonents (waxes)

7. Retardors

8. Pepticers for natural rubber mastication

9. Fabrics: nylon cord, i-ayon cord

10. Bead wire spools

11. Solvents for cements and solutions

12. Miscellaneous items like paints, colours, crayon, scrap flakes etc

3.3.3.1 RECEIPT OF RAW MATERIALS

3.3.3.1.1 VERIFICATION OF DOCUMENTS AT SECURITY GATE

The security inspector at main gate shall verify all documents pertaining to the

consignments brought to the factory before allowing entry in to factory premises and

note the following details. Serial no, suppliers name, description of item, challan

quantity, challan no and date or LR no and date, truck reg. no, date and time of

arrival, date and time of departure.

3.3.3.1.2 WEIGHMENT (BY THE COMPUTERISED WEIGH BRIDGE)

Security shall inform raw materials stores about the arrival of the vehicles at

the gate. The security guard and a representative from RMS shall record weighment

of trucks jointly. The Weighment slip shall indicate the following:

Serial no, time and date of receipt, suppliers name, gross weight with

materials, SIR no and date. After recording the above details in the computerised

weighing balance the vehicles shall be directed to the respective unloading bay. In

ATL weighment will be done in a weighbridge closer to the factory under the

supervision of security and RMS personnel after ensuring that the weigh bridge

posses a valid certificate from weight and measure department.

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Both security and RMS personnel shall sign on the computerized weighment

slip. One copy of the weighment slip will be filed in RMS along with concerned

delivery challan and the second copy will be returned by security department.

3.3.3.1.2 VERIFICATION OF DOCUMENTS AT RMS

The receipt in charge shall verify the documents to ascertain the no of

packages, description of materials code and weight of the material. If any discrepancy

is found the same shall be orally reported to the officer concerned before unloading.

He in turn will take decision suitably. The despatch documents include: Delivery

challan /invoice, LR/GC note, sales tax papers, packing list and duplicate copy for

transporter of invoice for availing MODVAT credit. In case of non receipt of any of

the above documents the consignment will not be unloaded unless and otherwise

instructed by the competent authorities after compliance of all conditions stated

above, the materials will be unloaded as instructed by the receipt in charge and lead to

the respective area.

3.3.3.1.4 HANDLING STORAGE AND PRESERVATION

All the incoming materials except the materials coming in tankers will be

unloaded manually or with the help of forklift as instructed by the receipt incharge.

Caged pallets or platform pallets are used for storing of materials so far as possible to

facilitate easy handling at the time of issue. Each caged pallets will carry a maximum

of 1500 kg of materials. Caged pallets will be stacked one over the other.

3.3.3.1.5 PRESERVATION

Carbon black and chemicals are stored in the 2'"1 floor, natural rubber /SBR,

wax etc in the 1st floor and fabric, bead wire, latex etc in the ground floor. In case of

space constraints in the respective floors, the materials may be kept in the ground

floor and other places as directed by the storage incharge. Materials received in

cankers, after checking the seal and dip reading and sample test by QA will be

directly pumped into the storage tank. Before unloading the receipt incharge will

make sure the availability in the storage tank.

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Rejection items are identified by displaying a rejection tag by technical

department. In the case of rejection of voluminous quantities the materials are kept in

respective areas till disposal, while small quantities will be removed and stored in the

rejection area duly displayed with the rejection tag.

CHART 6

3.3.4 ORGANISATION STRUCTURE OF PURCHASES & STORES DEPARTMENT

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GROUP MANAGER

KERALA FACTORIES

ASSO. MANAGER(FGS)

ASSO. MANAGER(ENGG STORES)

ASSO. MANAGER(RMS)

ASSO. MANAGER(PURCHASE)

EXECUTIVES EXECUTIVES EXECUTIVES EXECUTIVES

STORES PURCHASE

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PRODUCTION DEPARTMENT & PPC

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3.4 PRODUCTION DEPARTMENT

3.4.1 MANUFACTURING PROCESS

The entire production system has been broadly divided in to three sections, namely

Division A, Division B and Division C.

3.4.1.1 DIVISION A

3.4.1.1.1 BANBURY

All polymers are mixed with filler, process oil and other chemicals to give

different grades of rubber compounds in the Banbury. The mixed batch is then

dropped on a batch off mill for further mixing to form the rubber compound and then

in to a sheet form. The rubber in sheet form is then passed through a conveyor and

stacked on skids. Each type of rubber compound is specifically compounded for tyre

performance. Tyre meant for high way services and fast speed have different rubber

formulation as compared to tyres for mining service, agricultural service etc, large

bales of natural rubber are cut into smaller parts by a bale cutter, prior to mixing in

the Banbury. Carbon black, process oil, and other chemicals are mixed in the Banbury

along with rubber under specified temperature and time. An essential characteristic of

the Banbury is to give a good mix of fillers and chemicals with the rubber polymer.

Normally all rubber compounds are mixed in to two stages and natural rubber

compounds in three stages, as natural rubbers being tough, requires mastication. The

final stage in the Banbury is a critical stage when the sulphur and other curing agents

are added.

3.4.1.1.2 CORD DIPPING UNIT

Rayon and nylon cord requires treatment in order to make them suitable for

adhesion of rubber compounds. These cord fabric are passed through a liquid rubber

solution called 'latex' and is heated under tension through special ovens. Each type of

fabric like rayon, Nylon, Polyester etc should be coated with specific amount of

rubber latex in the cord-dipping unit. Fabric after passing through cord dipping unit is

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wound up in rolls and wrapped and packed in polyethylene in order to prevent

absorption of moisture from the atmosphere.

3.4.1.1.3 CALENDER

All fabric is coated with specific compounds in the calendar. Cord fabric is

coated on both sides with rubber layer, where as square woven fabrics are normally

frictioned and then they are coated on one side or both sides. Coating consists of

applying a rubber layer to top and bottom surface of the cords. Calenders are of

various types. 3 roll calender makes a layer of rubber compound between the top and

middle roll and squeezes the rubber layer on to the fabric on one side between the

middle and bottom roll. The fabric is then to be run again through the three-roll

calender in a similar process to get a coat on either side. The 4-roll calender can coat

on both sides of the fabric with rubber layers simultaneously. After calendering,

fabrics are wound in cotton liners in order to prevent sticking. Calenders are also used

to produce rubber layers to different widths and gauge that are required in the process

of tyre manufacturing.

3.4.1.1.4 EXTRUDERS

Extruders are distinguished by the diameter of their screws and are a single or

dual type.

a) SINGLE EXTRUDER

Rubber compounds after being broken down and warmed up on Mills, are fed

in to the screw of the extruders from which with the help of dies, produces a green

shape of treads, side walls, and other strips as per specified dimensions and contours,

width, gauge and weights. These strips are cooled in water sprayed conveyors and

then cut out in to specified lengths with the help of skiver (rotary cutting knife) and

booked in metal trays or wrapped in cotton liners. The word green denote uncured

rubber (i.e., non vulcanized)

b) DUAL EXTRUDER

Two separate set of mills on which two different types of compounds are

broken down and heated and fed separately to two different screws. The two

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compounds after extrusion are extruded together in a common head and with the help

of performer and final dies, emerge in to a pre-determined shape. The advantage of

dual extruder is that two rubber compounds of completely different composition can

be extruded.

3.4.1.2 DIVISION B

3.4.1.2.1 BEAD WINDING SECTION

The bead building machine manufacturers beads for all types of tyres. Beads

consists of a number of strands of copper coated steel wire which is coated with a

layer of rubber compound and then wound to specified diameter depending on each

tyre. Bead building machine consists of a lot of strands, for each strand of wire spools,

which is brought together and coated on an extruder with a layer of rubber compound

and then wound on a check which determines the final diameter. These rubber coated

wire spools are then covered with rubberised cotton sq. woven fabric with necessary

fillers or rubber compounds. The functions of beads in a tyre are to anchor the tyre

while mounting rims of vehicles.

3.4.1.2.2 BIAS CUTTER

Fabric after coating from the calender is run through bias cutter, which cuts

the fabric to, specified widths and angles. The width depends on the type of tyres and

the angle of-the cut depends on the type of tyre services required. The regular bias

angle tyre, the angle of the cords varies from 35inches to 45 inches from bead to bead.

This is the basic difference between the radial and biased angle tyres.

3.4.1.2.3 TYRE BUILDING MACHINE

All the necessary compounds like beads, plies (cord fabric), breakers, treads,

sidewalls, chafer etc are brought to the tyre-building machine. The tyre-building

machine have a turret for holding different numbers of plies, breaker fabric, chafer

rolls besides tread applying conveyor. Tyre building machine itself consists of a shaft,

which can rotate at different speeds. The direction of rotation can also be changed.

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According to the size of the tyre to be built specified building drum is mounted in the

shaft of the tyre-building machine. The fabric layers are then applied to the drum

along with the bead wire bundles, which are compressed together with the help of

different types of sticher wheels. After building cord carcass on the drum, in the final

stage the green tread, sidewall and chafers are applied. The green tyres, which are in

cylindrical form, are removed from the drum by collapsing the same.

3.4.1.3 DIVISION C

3.4.1.3.1 TYRE CURING

The green tyre from the tyre-building machine is prepared for vulcanization by

the application of lubricants on the inner and outer surfaces for better moulding. The

Bagomatic curing press which is the latest design (no separate air bags are required)

consists of a thin synthetic cured bladder positioned in the center of the bottom half of

the mould over which the green tyres are placed. As the press starts to close, steam

pressure is applied in to the bladder, which gives the tyre a press shape, and the

pressure is increased till the full shape of the tyre reached when the press is closed.

(I.e., both the top and bottom halves of the moulds are in contact with each other). At

this stage when the press is fully closed under high internal pressure and temperature,

curing media like steam and hot water are passed through the bladder while the outer

surface of the mould is heated by the steam. The internal pressure in the bladder is

critical for the purpose of obtaining good moulding effects. The heat or temperature

applied to different locations of the eyre compounds has to be as per the

specifications. Less heat or temperature will cause an under cure condition and excess

heat or temperature will cause deterioration in the rubber compounding fabric. After

vulcanization, the tyre is removed from the press and in the case of nylon truck tyres,

as additional process of post cure inflation may be required. This process consists of

mounting the tyre on specially designed rim and inflating the tyre to the required

pressure while it is still hot for a period of time in order to help final process of

vulcanization and maintain a proper shape.

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3.4.1.3.2 TYRE INSPECTION

All cured tyres are then physically inspected for visual defects and excess

rubber flashes are removed. The tyre is then checked in the balancing machine. The

tyre after inspection and classification are taken to ware houses.

CHART NO: 7

3.4.2 PRODUCTION PROCESS

CHART NO: 8

Department of MBA, ASIET. - 53 -

Banbury mixer

Mills

Calendar

Bias cutting

Band building

Tyre building

Tyre curing

Post cure inflation

Final inspection

Warehouse

Extruder

Thread skiverDip unit

Bead building unit

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3.4.3 ORGANISATION STRUCTURE OF PRODUCTION DEPARTMENT

3.5 PRODUCTION PLANNING AND CONTROL

Department of MBA, ASIET. - 54 -

DIV. HEAD(PRODUCTION

GROUP MANAGER(QUALITY)

EXECUTIVES

MANAGERDIV. A

MANAGERDIV. B

MANAGERDIV. C

ISO QS QC

SHIFTSUPDT

EXECUTIVES EXECUTIVES

WORKERS

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PPC is an important department of the company headed by a senior manager.

The department consists of a senior officer, one officer, 4 junior officers and 4

production assistants. For administrative purpose plant is divided into 3 divisions A,

B, C. Banbury mixer, dip chord unit, 4 roll and 3 roll calendering units, dual extruder

and cement house come under division A. The horizontal and vertical bias cutters,

Bead winding units and tyre building units come under division B. Division C covers

tyre curing section.

3.5.1 FUNCTIONS OF PPC

The main function of PPC is to plan production in such a way as to make the

best use of available resources so as to meet the target set by the Management.

Importance is given to best possible capacity utilisation in terms of manpower, raw

materials and equipment. The PPC department receives monthly ticket from the

management. This is converted to monthly production plan which in turn is

distributed into a daily plan on the basis of the number of working days and lead time

required for making each component.

The daily plan is made on the basis of factors like

1. Output of each press in a shift

2. Output of each building machine in a shift

3. Mould and machine availability\curing cycles and no of presses

4. Current lineup and manning

5. Priority based management decisions

6. Availability of feeding materials

The daily plan will be received everyday and plan for 3 shifts are made. It

takes 2 to 3 days to convert raw materials to finished goods. Hence all the decisions

on the components to be made in the next 3 shifts would depend on what is going to

be the cured tyre production 2 to 3 days hence. Since there is a buffer for green tyres,

the inventory of green tyres should also be considered. This would shift the focus

from cured tyres to inventory of green tyres available.

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PPC department also consider the following factors for visualising the

next 3 shift production plan:

1. Cured tyre production for 3 shifts

2. Projected green tyre inventory for next 2 to 3 days.

3. Latest component wise inventory

4. Comparison of planned and actual production for the previous 3 shifts;

5. Production up to the day of the week and target for the remaining days.

6. Machine availability data

First the schedule for the finished tyres is made, based on this, the schedule for

the green tyres for that shift is made. Since the tyre building process requires

assembly of large number of components namely: tread, sidewall, squeegee, plies,

braker, chaffer and beads.

Each of these components has to be scheduled separately. Tread and sidewall

are extruded from the dual extruder. So depending on the no of tyres to be made, a

schedule is made for the dual extruder. Similarly the number of plies required for each

shift in each category is arrived from the tyre-building schedule. A tyre requires

different plies of different sizes and width. Since the requirement of plies is in the

form of cuts, a conversion factor is used. The requirement of each component is

directly related to the stock on hand. The components with least inventory are given

high priority on the basis of their requirement. The plies are cut in horizontal or

vertical bias cutters. Certain plies have restriction with respect to the choice of bias

cutter. Thus schedules for the bias cutters have to be made on the basis of bias option

and priority of ply. Plies are made from calendered fabric that in turn is made by

coating sides of the dipped fabric with rubber compound. This is done in 4-roll

calender. So a schedule for the 4-roll calender is made on the strength of the inventory

of the calender roll. The plies cut in the bias cutters also need to go through a process

called squeegee application in which a thin layer of rubber compound is pressed

against the inner surface of each ply. This is done in 3-roll calender. Besides a

schedule for 3 roll and 4 roll calender machines, a schedule is prepared for the dip

unit from where dipped fabric is obtained which is used for calendering. Similarly

schedules are made for the bead preparation, which includes bead winding, tillering

and flipping. Here we can see that bottom up approach has been used in generating

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the schedule i.e. based on the requirement of each preceding step the schedule for the

next step is made. This is because whatever is made in step 1 is consumed in step2

and so on. To prepare schedules the personnel of PPC department have to take the

physical inventory of the work in progress and finished goods everyday for each

component involved in the tyre manufacture. Besides the PPC department has to

maintain the RM inventory from the RM store. Other functions include

communicating mould changes to production department, generating reports on

production, stock of raw material, working progress, finished goods, experimental

tyres, outside mixing and scrap. The schedules that are prepared are given to various

production departments for deciding the final layout of the machines for production.

The factors that are crucial to the success of the schedule are

1. Mould and Machine availability

2. Accuracy of daily physical inventory

3. Computerisation

4. Timely receipt of ticket

The management requires vital information relating to mould and machine

availability, shift wise production details (scheduled and actual), daily inventory of

finished goods and green tyres etc

CHART NO: 9

3.5.2 ORGANISATION STRUCTURE OF PRODUCTION

PLANNING AND CONTROL DEPARTMENT

Department of MBA, ASIET. - 57 -

Group Manager

Assoc. ManagerAssoc. Manager

Executives

Assoc. Manager

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TECHNICAL DEPARTMENT

3.6 TECHNICAL DEPARTMENT

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The Technical department plays a very crucial role in the organisation. It is

basically an R&T (research and technology) department. Technical department is

mainly concerned with improving quality of tyres by methods like reduction in curing

cycles, reducing tyre shape problems etc. Technical coordination meetings take place

once in every 3 months. The Technical coordination committee will consist of

members from marketing field also.

3.6.1 MAIN SUBGROUPS OF TECHNICAL DEPARTMENT:

3.6.1.1 DESIGN GROUP

The main functions are development of new design, modification of existing

design and comparing with competitor's designs. Design part is mainly concerned

with mould design

3.6.1.2 R&D GROUP

It is concerned with compound development, testing, and RM development.

3.6.1.3 PRODUCT GROUP CONCEPT

The main function is to find out the needs of the market, problems of the tyre,

replacement of damaged tyres. The main market includes original equipments

manufactures, STU (state transport units), LCV, Exports, Passenger Car Tyres, tubes

and flaps development. It involves developing products according to the requirements

of the market.

3.6.1.4 PLANT TECHNOLOGY GROUP

This group implements the technology required for producing tyres according

to the needs of the market at the plant level. According to the marketing needs quality

products are delivered by strict quality procedures. It also includes troubleshooting.

CHART NO: 10

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3.6.2 ORGANISATION STRUCTURE OF

TECHNICAL DEPARTMENT

Technical Department looks after tyre engineering, heat engineering and

related matters and this department has close contacts with the production department.

Department of MBA, ASIET. - 60 -

Division Head

Manager

Assoc. Manager

Executives

Manager

Assoc. Manager

Executives

Manager

Assoc. Manager

Executives

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QUALITY ASSURANCE DEPARTMENT

3.7 QUALITY ASSURANCE DEPARTMENT

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Quality is the totality of characteristic of an entity that bears on its ability to

satisfy, stated and implied needs. Quality is referred to as 'fitness for use' or 'fitness

for purpose' or 'customer satisfaction' or 'conformance to requirements'.

QA is the well-planned and systematic activities implemented within the

quality system and demonstrated as needed to provide adequate confidence that an

entity will fulfill requirements for quality.

For international trade transaction ISO Certification has become inevitable.

ATL has got the privilege to have ISO 9001 Certification. ISO 9001 (1994) covers the

quality system and model for QA in design, development, production, installation and

servicing.

ATL Perambra has a well-functioned QA department. They divided the whole

plant in to three divisions. Each division comes under a Quality Auditor, says

Supervisor. For each process there is an audit form. Quality audit is taken by quality

Auditor. It is a systematic and independent examination to determine whether quality

activities and related results comply with planned arrangements and whether these

arrangements are implemented effectively and are suitable to achieve objectives. One

of the purposes of quality audit is to evaluate the need for improvement or corrective

action. Audit should not be confused with inspection activities performed for the

purpose of process control.

If any deviation is there, then they will take corrective action to eliminate the

causes of an existing non-conformity with the concerned people or department

(technical). In order to prevent defect or undesirable deviation, it will be marked as

'HOLD'. HOLD point is a point beyond which the activity must not proceed without

the approval of the designated department

3.7.1 OTHER FUNCTIONS

3.7.1.1 RAW MATERIAL TESTING

Quality of all the raw materials received are tested in the laboratory consists of

three different sections.

1. Fabric laboratory

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The laboratory tests all fabric and steel wires received, and at all stage of

the process i.e. after dipping, after calendering, and in the cured stage etc.

2. Chemical laboratory

This laboratory carries out tests for all polymers, fillers and chemicals.

3. Physical laboratory

All rubber compounds in process are tested in the laboratory on each stage

i.e., after mixing in the Banbury, after extrusion, and calendering and after

curing.

3.7.1.2 TYRE TESTING

Samples of cured tyres are tested indoors on a test wheel. The wheel simulates

the running condition of a tyre, primarily used to detect carcass strength and heat

generation. Tyres are also fitted on different vehicles to study the effects of different

types of roads, loads and climate conditions.

CHART NO: 11

3.7.2 ORGANISATION STRUCTURE OF QUALITY ASSURANCE DEPARTMENT

Process control & Audit Laboratory

Quality Engg. Systems product testing

Department of MBA, ASIET. - 63 -

Manager

Assoc. Manager Assoc. manager

Executives Executives ExecutivesExecutives

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INDUSTRIAL ENGINEERING

DEPARTMENT

3.8 INDUSTRIAL ENGINEERING DEPARTMENT

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Group manager is the head of this department and there are associate manager

and executives under him. The main objective of this department is to plan, design,

implement and manage integrated production and service delivery systems that assure

productivity, quality, reliability, maintainability and cost control to keep Apollo

globally competitive.

3.8.1 FUNCTIONS

1. Conduct work-studies, improvement studies in various equipment and fixation

of norms.

2. Capacity calculation in various equipment from time to time consequent to

various changes.

3. Design, Implementation and follow up of incentive schemes in various zones.

4. Planning and assessment of manpower requirements of various departments

periodically.

5. Studying plant layout and material handling systems and suggesting

improvements.

6. Explore the possibilities of capacity expansion and prepare project reports.

7. Negotiations with unions regarding various issues like incentive schemes,

productivity, expansion and labour issues

8. Analysis of capital expenditure request from various departments and make

recommendations to Senior Management Committee.

9. Prepare budgetary planning for capital and cash flow requirement.

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10. Prepare documents for long-term settlements, bonus settlements etc. and

represent the management in the meetings with the Unions /Labour

Departments.

11. Visit other Industries for getting information regarding LTS methods,

practices and other developments.

12. Conduct various training classes for workmen, supervisors, other officers and

new recruits.

13. Apply various Industrial Engineering techniques such as job evaluation, O&M

(Organisation & Methods) studies, Kaizen, Line Balancing etc.

14. Suggest various cost reduction programmes and implementation.

15. Associate with professional bodies like Productivity Council, NITTIE, and

Institution of Engineers etc.

16. Conduct daily audit on manpower, productivity, lost time, scrap details,

absenteeism, overtime etc.

17. Permit various other management information reports to the top management.

18. Evolve best practices and processes through global benchmarking in the

context of global competitions and intense customer focus.

19. Optimise inventory levels at various stages such as Engineering Stores, work

in progress and finished goods.

20. Continuous improvement of methods and equipments design compatible to the

best ergonomic standards.

CHART NO: 12

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3.8.2 ORGANISATION STRUCTURE OF INDUSTRIAL

ENGINEERING DEPARTMENT

Department of MBA, ASIET. - 67 -

Group Manager

Assoc. Manager

Executives

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ENGINEERING DEPARTMENT

3.9 ENGINEERING DEPARTMENT

This department consists of Electrical, Mechanical and utility division.

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3.9.1 UTILITY DIVISION

The Utility division is the source of steam, power, water and compressed air.

The main functions of this division include:

3.9.1.1 DEMINERALISATION OF WATER

The water pumped from Chalakudi River is demineralised by a series of

operation like filtration, passing through an ion exchange matrix etc. This is done to

remove dissolved oxygen and minerals. It is then stored in a storage tank.

3.9.1.2 BOILER AND UTILITY

There are 3 boilers running to fulfill the present demand of steam. The

capacity of two boilers is 10 TPH(Tonnes Per Hour) and 14 TPH. The Boilers are flat

tube type and furnace oil is used as fuel. The steam generated has a pressure of 15.5

Kg/cm2

3.9.1.3 CHILLED WATER PLANT

There are 4 chillers and the medium used is FREON. The capacity of each

chiller 115TR. The temperature of the chilled water 55°F. Sections which required

chilled water are: TCU, Dual extruder, Banbury, Mill etc.

3.9.1.4 COMPRESSOR HOUSE

There are total seven compressors. It is again divided into high pressure(HP),

low pressure(LP), and medium pressure(MP). All these are passed through the

dryers to remove any moisture content. LP is used for instrument purpose (60psi),

MP is used for Banbury, Tyre building, and Bias cutter sections(90psi) and HP is

bused for Tyre curing unit and post cure inflation unit (150psi). Total electricity

consumption is 105000 units. A stand by generator is available to met the

emergency.

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3.9.2 ELECTRICAL WORK SHOP

The main job of this department is electrical maintenance including electronic

instrumentation. The main management hierarchy is given below.

Total strength of this department is around 50. The maintenance activities

mainly include break down maintenance and preventive maintenance. In the case of

break down maintenance, a maintenance slip is given from the respective department

to this department including the date and the type of maintenance work required, so

that it is possible to take necessary actions. Preventive maintenance includes

developmental activities. Here pre-checking and necessary actions are done in order

to avoid the break down. Spare keeping function also included under preventive

maintenance.

There is a programmable logic array (PLL) circuit for controlling the

production process. It is actually a computer system with out the monitor and

keyboard. It contains a processing unit, control unit and memory unit. The purpose of

the control unit is to initiate a series of sequential steps of micro operations. During

any given time, certain operations are to be initiated while all others remains idle.

Thus the control variable at any given time can be represented by a string of 1's and

0's.

The control memory is assumed to be ROM, with in which all control

information is permanently stored.

The design of a control circuit includes the following steps

1. The problem is stated

2. An initial equipment configurations is assumed

3. An algorithm is formulated

4. The data processor part is specified

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CHART NO: 13

3.9.3 ORGANISATION STRUCTURE OF ENGINEERING DEPARTMENT

Department of MBA, ASIET. - 71 -

DIV. HEADENGINEERING

MANAGER(PROJECTS & DESIGN/ CIVIL)

GROUP MANAGER(ELECTRICAL & ELECTRONICS)

GROUP MANAGERMECHANICAL

MANAGERUTILITIES

GROUP MANAGER(INSTRUMENTATION)

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ACCOUNTING AND FINANCE

DEPARTMENT

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3.10 ACCOUNTING AND FINANCE DEPARTMENT

The corporate office situated at Gurgaon does most of the accounting and

taxation jobs of ATL. At Perambra plant there is a separate accounting and finance

department. This department deals with salary, wages and costing. Excise duty of the

raw materials also comes under this department.

3.10.1 CURRENT FINANCIAL POSITION

Sales from operations during the financial year ended March 31, 2006

amounted to an all time high of Rs. 3,002.12 crore as against Rs. 2,656.81 crore

during the previous year, recording a growth of approx.13%.

Operating profit, before interest and depreciation, amounted to Rs. 223.92

crore as against Rs. 184.64 crore during the previous year, registering an increase of

approx. 21.27%. Net profit, after providing for interest, depreciation, tax and

exceptional items amounted to Rs. 78.17 crore, as against Rs. 67.63 crore during the

previous year.

The strong performance of Apollo is a combination of high growth in sales

alongwith enhanced operations management, better working capital management,

aggressive marketing and overall cost reduction measures adopted by the Company.

During the year, your Company realigned its relationship with Michelin and

exited from the Joint Venture Company “Michelin Apollo Tyres (P) Ltd.”, as

radialisation in commercial vehicle tyres segment in Indian markets had not reached

anticipated levels. The Company recovered almost its entire investment in the JV

through sale of its 49% stake back to Michelin. This re-alignment would enable the

Company to utilise the available resources better towards other growth opportunities

in short to medium term.

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3.10.2 PRODUCTION

During the year 2005-06, your Company has achieved 12.2% growth in

production tonnage by recording production of 2.52 lac MT as against 2.24 lac MT in

the previous year. As a result of successful implementation of expansion programme,

the total capacity across the plants has increased to 704 MT/day from 628 MT/day.

3.10.3 DIVIDEND

Your directors recommend for your approval a dividend of Rs. 4.50 per equity

share for the financial year 2005-06. There will be no tax deduction at source on

dividend payments, but your Company will have to pay tax on dividend @ 14.025%,

inclusive of surcharge.

The dividend, if approved, shall be payable to the shareholders registered in

the books of the Company and the beneficial owners as per details furnished by the

depositories, determined with reference to the book closure from 23-8-2006 to 25-8-

2006 (both days inclusive).

3.10.4 TURNOVER AND NET PROFITS

TABLE NO:3

Apollo Tyres Ltd – Turnover Apollo Tyres Ltd- Net Profits

Year Rs. in Crs Year Rs. in Crs

1998-99 1154.02 1998-99 31.08

1999-00 1368.75 1999-00 76.06

2000-01 1458.70 2000-01 25.42

2001-02 1710.00 2001-02 42.40

2002-03 2025.10 2002-03 120.02

2003-04 2314.31 2003-04 70.42

2004-05 2656.8 2004-05 67.63

2005-06 3002.12 2005-06 78.17

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CHART NO: 14

3.10.5 ORGANISATION STRUCTURE OF ACCOUNTS AND FINANCE DEPARTMENT

Department of MBA, ASIET. - 75 -

DIV. HEAD

EXECUTIVES

ASSO. MANAGER(COSTING)

ASSO. MANAGER(A/Cs & FINANCE)

EXECUTIVES

MANAGERAFD- KOCHI

EXECUTIVES

MANAGER(EXCISE)

EXECUTIVES

MANAGER(SECRETARIAL)

EXECUTIVES

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SYSTEMS DEPARTMENT

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3.11 SYSTEMS DEPARTMENT

The system department is responsible for computerisation of different

departments of ATL. The main function of this department, operates and co

ordinates all systems in the organization. The simple structure of department

facilitates speedy communication flow with in the department.

3.11.1 SAP R/3

The third generation set of highly integrated software modules that perform common

business function based on multi-national leading practices. Takes care of any

enterprise however diverse it may be in operations, spread over the world

geographically. SAP was founded in 1972 by 5 people Wellen Reuthor, Hopp,

Hector, Plattner & Tchira .

SAP was installed in Perambra Plant in the year 2004. IBM is the implementation

partner. There are around 250 computers and 100 printers were placed in different

departments, which are connected to a Central Server in the Head-office (Gurgaon,

Haryana). HCL is the service provider of Apollo Tyres. They provide VPN (Virtual

Private Network) network through BSNL leased line. The bandwidth capacity of the

leased line is 2Mbps by using OFC.

3.11.2 MONITORING FUNCTION

Security problems in the SAP were solved using Central Virus Scanning

System and Firewall at the head office (Gurgaon, Haryana). HCL solve all the

problems related to the network connection.

3.11.3 MAINTENANCE FUNCTION

The system department in the plant solved network problems as well as

computer problems. Regular backups were taken daily, weekly and monthly for

providing reliability in the SAP system.

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All the computers were connected using both point-to-point and star topology

to form an Intranet inside the plant. Proper authentication was given to each

department members using a user ID and a password.

.

CHART NO:15

3.11.4 ORGANISATION STRUCTURE OF SYSTEMS

DEPARTMENT

Department of MBA, ASIET. - 78 -

Division Head

Executive Executive

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MARKETING DEPARTMENT

3.12 MARKETING DEPARTMENT

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Sustained growth of ATL in the recent period of time is the result of planned

and focused marketing initiatives. There is no separate department for marketing in

Kalamassery plant and in Perambra. ATL has three corporate offices in Kerala (Cochin

(Main office), Trivandrum, and Calicut which does the market functions for company.

3.12.1 FUNCTIONS

1. To fix a reasonable price for the product.

2. To satisfy customers by providing high quality products.

3. Carry out promotional activities.

4. To identify new segments.

5. To carry out market research to collect information regarding price

variations, export and analyzing the current market situations.

3.12.2 SEGMENTATION

ATL market segmentation is use based segmentation. ATL segregate the

market as commercial and personal. Commercial constitutes light trucks, heavy trucks

and jeeps, which constitutes 90 per cent of the entire tyre market of India. The rest

constitutes the personal transportation, primarily cars driven for personal reasons. In

fact, even taxis come under the commercial segment.

3.12.3 TYRES

Amazer - Traditional cars (Ambassador and Premier padmini)

Amazer XL - Hyundai Santro, Accent Ford ikon, Fiat sienna,Tata indigo.

Quantum - Van (Mahindra Voyager and Toyota Qualis)

Tracto - Krishak, Krishak super andPower haul

LCV - Amar anchor. Rider Mile star and Tropper

ADV(Animal Driven Vehicles) - BHIM and ADV plus Tubes

Truck - supreme, Cargo miller Cargo express, Marathon and Guard.

LCV - Cargo Rib and Amar

3.12.4 TARGETING

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ATL mainly focus on truck segments (truck tyre market (replacement and

OEMs), light truck commercial market and in the farm category, which are the rear

tractor tyres. Due to the increased competition and customer demand they also focus

on radial tyres. To produce truck/bus radials ATL and Michelin entered into a joint

venture.

3.12.5 POSITIONING

ATL has created an image in the minds of the customers regarding the quality

of their product and its past performance. Constant process is done at every stage of

manufacture and the company performance. ATL positions its products according to

the product variety.

3.12.6 PRICING

The price is fixed depending on the variation of the price of main raw materials

and based on the market situations.

3.12.7 RETAILING

Retail selling of ATL's products is through dealers. Launching of customer

acquisition and retention programmes has helped in imparting knowledge to the dealers

and enhancing dealer network. This resulted in increase in goodwill and brand equity of

ATL.

3.12.8 ADVERTISING STRATEGY

ATL use a mix of media for the target audience. ATL advertise less for

commercial vehicles because it is more face-to-face and interactive. For car radials,

they use a mix of media depending on the target group. Other promotional activities

include printing of brochures, sponsoring of events and running various awareness

campaigns.

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3.12.9 TRENDS IN SALES QUANTITY (PRODUCTS)APOLLO TYRES LTD.

TABLE NO: 4

Product/s manufactured/traded

Mar 2001 Mar 2002 Mar 2003Mar 2004

Mar 2005

Automobile Flaps 16.33Lakh nos

19.85Lakh nos

24.35Lakh nos

28.25Lakh nos

29.19Lakh nos

Automobile Tubes 30.68Lakh nos

32.54Lakh nos

36.67Lakh nos

43.83Lakh nos

53.81Lakh nos

Automobile Tyres 30.88Lakh nos

35.37Lakh nos

40.37Lakh nos

48.58Lakh nos

60.13Lakh nos

Camel Black/Retreading

Materials

0 0 0 0 0

Scrap 0 0 0 0

Trend shows that, every year the products manufactured and traded has

increased tremendously. In 2001, 30.86 lakh nos tyres were manufactured & traded.

Whereas in the year 2005 60.13 nos tyres were manufactured & sold, which is twice the

production achieved in 2001.

3.12.10 DOMESTIC MARKETING

The top line growth was registered on a foundation of taking the corporate

journey of “Passion In Motion” into every aspect of our activities and operations to

build greater customer satisfaction. This is based on the principle that one delighted

customer will be a customer for life and will also bring in ten more into the Apollo

Tyres customer base.

The robust distribution network was further strengthened over the year by

servicing our dealers through our 118 district offices and 12 distribution centres; our

end consumers through our 4,250 dealers thus ensuring availability of the product

through industry-leadingspread and depth across the country.

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While we continue to lead in the replacement market, our relationships with

key automakers have become more collaborative and vibrant allowing us to conduct

more profitable business with them and generate more replacement sales.

On the product front, we launched the premium “Gold” range in the truck &

bus segment that gave a clear product benefit proposition of greater mileage. The

Acelere range of high performance passenger car tyres was expanded to cater to the

latest cars being introduced in the country while the entire Hawkz range was also

rolled out to cater to the growing popularity of sport utility vehicles (SUVs).

In our constant quest to innovate for greater customer delight, your Company

launched the ‘Apollo Acelere Tubeless Service Point’ whereunder till March 31,

2006, 162 tyre dealers across the country have been appointed to service tubeless

passenger car tyres. The Acelere Wheelz range of high performance alloy wheels for

passenger cars was expanded to offer the tyre dealer with an additional business

stream while the car owner got a world-class product right here. These initiatives are

in our quest to make your Company evolve into more than just a tyre maker and

marketer by offering products and services that embellish the core tyre business

through a one-stop-shop solution. This quest of your Company becoming a “tyres

plus” marketer will continue through the years.

On the service front, our 3-day claim settlement regimen gained

unprecedented appreciation from the end consumer. Apollo Mobile, a phone based

facility to let our dealers have updates about critical aspects of their business is

another industry first. Our expanding specialist network of ‘Apollo Pragati Kendras’

and ‘Apollo Tyre Worlds’ has been strengthened with the partnerships forged with

Reliance Petroleum, ONGC ‘Oval’ and Tata Motors to market the range of Apollo

Tyres through their networks, further improving our reach and availability.

Interesting initiatives have also been undertaken in areas of communication

and corporate properties by partnering in the ‘Apollo Tyres Top Gear Design

Awards’, the ‘CNBC Autocar India Auto Awards’ and the ‘Business Today

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Knowledge Forum’. This has helped positionyour Company’s brand as a leader and

innovator among the decision makers in the automotive industry.

The overall performance of delivering double digit growth while maintaining

the premium position and price leadership is what gives your Company a unique

leadership position in the industry, within the distribution network, among business

partners and the end consumers.

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CHAPTER 4

4.0 SWOT ANALYSIS OF APOLLO TYRES LTD.

4.1 STRENGTHS

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Continued Market Leadership in the dominant industry segment i.e. Truck /

Bus tyres.

Global presence with acquisition of Dunlop Tyres International (Pty) Ltd in

South Africa.

Robust Operation Center for managing IT operations across 140 Locations

supported by ERP / Dealer Portal / Information Systems Security Control etc.

Presence in technology products in car radial segment.

Dynamic & Progressive Leadership.

Responsive to changes in market conditions and product profiles.

Product innovation and technical superiority.

Strong Brand recall in a price sensitive market.

Economies of transportation cost on account of closeness to natural rubber

growing belt.

4.2 WEAKNESSES

No presence in two/three wheeler segment.

Declining profit margins due to raw material cost push.

4.3 OPPORTUNITIES

Continuous thrust in road infrastructure and construction of expressways &

national highways. Creation of road infrastructure has given, and will

increasingly give a tremendous fillip to road transportation in the coming

years. Tyre industry will play an important role in this changing product mix

of transport.

Leadership position in the commercial vehicle segment will enable the

Company to leverage new and related business opportunities.

Access to global sources for raw materials at competitive prices due to

economies of scale.

Steady growth in vehicle production in the immediate future leading to

growing demand.

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4.4 THREATS

An increase in the flow of tyres from competitive sources like China.

Cheaper imports on account of import from countries which are signatories to

Regional Trading Agreements (RTA’s).

With crude prices scaling upwards, pressure on raw material prices can be

expected.

Continuous increase in the prices of natural rubber, which accounts for nearly

one third of total raw material cost.

4.4.1 INTERNAL

Rising cost of inputs

Tyre Industry is raw material intensive and a large share of raw materials and

inputs are closely linked to the International crude oil prices. With crude

prices scaling upwards during the current fiscal and with expected increases in

the near future, upward pressure on raw material prices can be expected.

Price of natural rubber, which accounts for nearly one-third of total raw

material cost has witnessed unexpected and unprecedented increase and the

trend is likely to continue.

4.4.2 EXTERNAL

Import of cheap truck radials in the Indian market from China and South-east

Asian countries.

Development of cold process re-treading.

Integration with the global economy will necessitate lowering of import tariffs

not only for raw materials but finished products, including tyres, as well. An

increase in the inflow of tyres from cheaper and competitive sources like

China can be expected.

Increased thrust on Regional Trading Agreements (RTAs) will also facilitate

cheaper imports into the country from countries that are signatories to the

RTAs.

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Higher transaction cost as prevailing in the country.

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CHAPTER 5

5.1 FINDINGS

Industrial relations with local unions are fairly good and there is greater co-

operation between management and employees.

Workers for the fear of loss of jobs resist modernization of plant

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A fair wage system exists in ATL.

Workers health and safety are given prime importance.

Employees are more or less satisfied.

Optimum utilization of workforce is not done.

A good coordination exists between different departments.

Labour turnover is very low.

Investment in R&D is meager.

Trade unions play a vital role as bargaining agents. The management is

sometimes forced to accept unreasonable demands made by the unions.

5.2 SUGGESTIONS

A bit more promotional activities could enhance building brand image.

Company should try to increase its market share in the radial tyre segment.

More atomization should be done so as to reduce the number of workers.

Their should be some classes or training arranged for better understanding of

SAP.

Reaching better horizons by fostering new partnerships.

Increase production for increased profits.

Initiate major strategies towards empowering dealers.

Having strong position in truck and tractor segment, can explore passenger

vehicle segment.

5.3 CONCLUSION

Apollo Tyres Limited (ATL) is one of the leading tyre manufacturing

companies and is slowly moving in the path of progress. Apollo currently enjoys the

largest market share in heavy, commercial vehicles and light truck tyres. The Apollo

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dealer network of over 4000 is the one of the largest in the country. It has strategic

alliance with Michelin of France, which is the No.1 tyre company in the global market

Company places a great deal of confidence on its excellent pool of HR, which is the

key to its future growth. The industrial relation atmosphere was cordial and the focus

is also on training at all levels including works men to new concepts of management

in alignment with the overall corporate objectives.

Apollo is quick in absorbing and adapting the latest technologies, as part of

this SAP was implemented in the record time of 8 months; this has enabled it to

connect to a vast network of 140 centres by converting them into a single source data

centre. Apollo has also implemented APO (Advanced planner &optimize), the dealer

portal helps dealers to directly place their orders, check their financial statement and

even sort out their claim status.

The demand and growth for the industry depends on primary as well as

secondary factors. The primary being the overall GDP growth, industrial production

and growth in vehicle demand. Secondary factor like the infrastructure development,

prevailing interest rates and financing options. Soaring raw material prices with

limited pricing flexibility impacted the profit margins of all the players. The year

ahead still looks tough with no easing in raw material prices.

Despite of all these challenges Apollo has done well in the past and with a

booming economy and a focused and progressive leadership at the top, Apollo is

UNSTOPPABLE.

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BIBLIOGRAPHY

6.0 BIBLIOGRAPHY

Aswathappa K. Human Resource & Personnel Management-

Tata Mc Graw Hill Publishing Co. Ltd., 2002 Edition.

Chary S. N Production & Operations Management-

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Tata Mc Graw Hill Publishing Co. Ltd., 1999 Edition.

Prasanna Chandra Financial Management Theory and Practice

Tata McGraw Hill publishers (2004)

C.R. Kothari Research Methodology Methods and Techniques

New Age Publishers (2004)

REPORTS

Annual Report of Apollo Tyres Ltd. 2005 – 2006

Annual Report of Apollo Tyres Ltd. 2004- 2005

Company manual

WEBSITE

www.apollotyres.com

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APPENDIX

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